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Application and Development of a Fuzzy Analytic Hierarchy Process within a Capital Investment Study

Author

Listed:
  • Yu-Cheng Tang

    (Department of Accounting, National Changhua University of Education, Taiwan)

  • Malcolm J. Beynon

    (Accounting and Finance Section, Cardiff Business School, University of Wales Cardiff)

Abstract

Capital budgeting as a decision process is among the most important of all management decisions. The importance (consequents) of the subsequent outcome may bring a level of uncertainty to the judgement-making process by the decision maker(s) in the form of doubt, hesitancy, and procrastination. This study considers one such problem, namely the selection of the type of fleet car to be adopted by a small car rental company, a selection that accounts for a large proportion of the company¡¦s working capital. With a number of criteria to consider, a fuzzy analytic hierarchy process (FAHP) analysis is undertaken to accommodate the inherent uncertainty. Developments are made to the FAHP method utilised to consider the preference results with differing levels of precision in the pairwise judgements made.

Suggested Citation

  • Yu-Cheng Tang & Malcolm J. Beynon, 2005. "Application and Development of a Fuzzy Analytic Hierarchy Process within a Capital Investment Study," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 1(2), pages 207-230, July.
  • Handle: RePEc:jec:journl:v:1:y:2005:i:2:p:207-230
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    References listed on IDEAS

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    1. Sutardi & bector, C. R. & Goulter, Ian, 1995. "Multiobjective water resources investment planning under budgetary uncertainty and fuzzy environment," European Journal of Operational Research, Elsevier, vol. 82(3), pages 556-591, May.
    2. Thomas L. Saaty, 1986. "Axiomatic Foundation of the Analytic Hierarchy Process," Management Science, INFORMS, vol. 32(7), pages 841-855, July.
    3. Ahn, Byeong Seok, 2000. "The analytic hierarchy process in an uncertain environment: A simulation approach by Hauser and Tadikamalla (1996)," European Journal of Operational Research, Elsevier, vol. 124(1), pages 217-218, July.
    4. Buckley, James J. & Feuring, Thomas & Hayashi, Yoichi, 2001. "Fuzzy hierarchical analysis revisited," European Journal of Operational Research, Elsevier, vol. 129(1), pages 48-64, February.
    5. Wang, W., 1997. "Subjective estimation of the delay time distribution in maintenance modelling," European Journal of Operational Research, Elsevier, vol. 99(3), pages 516-529, June.
    6. Zhu, Ke-Jun & Jing, Yu & Chang, Da-Yong, 1999. "A discussion on Extent Analysis Method and applications of fuzzy AHP," European Journal of Operational Research, Elsevier, vol. 116(2), pages 450-456, July.
    7. Beynon, Malcolm, 2002. "An analysis of distributions of priority values from alternative comparison scales within AHP," European Journal of Operational Research, Elsevier, vol. 140(1), pages 104-117, July.
    8. Cheng, Ching-Hsue & Lin, Yin, 2002. "Evaluating the best main battle tank using fuzzy decision theory with linguistic criteria evaluation," European Journal of Operational Research, Elsevier, vol. 142(1), pages 174-186, October.
    9. Zahir, Sajjad, 1999. "Geometry of decision making and the vector space formulation of the analytic hierarchy process," European Journal of Operational Research, Elsevier, vol. 112(2), pages 373-396, January.
    10. Chang, Da-Yong, 1996. "Applications of the extent analysis method on fuzzy AHP," European Journal of Operational Research, Elsevier, vol. 95(3), pages 649-655, December.
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    Citations

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    Cited by:

    1. Wang, Ying-Ming & Luo, Ying & Hua, Zhongsheng, 2008. "On the extent analysis method for fuzzy AHP and its applications," European Journal of Operational Research, Elsevier, vol. 186(2), pages 735-747, April.
    2. Behrooz Noori, 2015. "Prioritizing strategic business units in the face of innovation performance: Combining fuzzy AHP and BSC," International Journal of Business and Management, International Institute of Social and Economic Sciences, vol. 3(1), pages 36-56, February.
    3. Behrooz Noori, 2014. "Prioritizing strategic business units in the face of innovation performance: Combining fuzzy AHP and BSC," Proceedings of International Academic Conferences 0802059, International Institute of Social and Economic Sciences.

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